Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-78c5997874-j824f Total loading time: 0 Render date: 2024-11-10T15:48:13.560Z Has data issue: false hasContentIssue false

4 - Measuring Market Efficiency

Published online by Cambridge University Press:  14 April 2022

Carlo Altomonte  and
Filippo di Mauro
Carlo Altomonte
Affiliation:
Università Commerciale Luigi Bocconi, Milan
Filippo di Mauro
Affiliation:
IWH-Halle and CompNet
Get access

Summary

We present in this chapter the empirical techniques used to measure market efficiency and its implications, starting with the so-called OP gap and its dynamic version. We will then discuss the Foster productivity decomposition method and the Hsieh and Klenow techniques to measure allocative inefficiency. Market inefficiency is also related to concentration and market power. When competition in a market is reduced, aggregate productivity growth may decrease, reducing consumer welfare.

Keywords

market efficiencydecompositionallocative inefficiencyconcentrationmarket power
Type
Chapter
Information
The Economics of Firm Productivity
Concepts, Tools and Evidence
 , pp. 54 - 63
Publisher: Cambridge University Press
Print publication year: 2022

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×